by When Lionel Messi left Barcelona for Paris Saint-Germain in 2021, it was because the LaLiga side could not afford to keep him under the strict financial rules of Spanish soccer. On March 30, when Messi left the micro-cap fashion house MGO Global for the much larger Centric Brands, it was for much the same reason: The cold reality of corporate accounting meant that MGO could not afford its star keep in the house.
One of the world’s most popular athletes, Messi inked a licensing deal in 2018 with an upstart fashion firm founded by Maximiliano Ojeda, an Argentinian businessman turned New York real estate agent, and former creative director Ginny Hilfiger for Fila brand and creative. an executive in her brother Tommy’s company.
Through connections Ojeda made selling condoms and co-ops in New York over the past decade, he met fellow Argentine Messi and convinced him to let Hilfiger design a line of outerwear and casual wear and sell it through MGO Global, the business they started with Messi. as their basic brand. Its goal: “to create a performance-based lifestyle brand portfolio company focused on strategically leveraging the fame, celebrity power and global social media influence of elite athletes, entertainers and other cultural icons,” said MGO in its prospectus for the 2023 initial public offering.
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It seemed that one of the world’s most sought-after athletes had achieved great success for a company at the forefront of the highly competitive world of fashion. And the timing for publicity seemed opportune: Four weeks after Messi led Argentina to the 2022 World Cup, MGO raised $8.63 million in its IPO.
“Showing how influential the Messi name is in the fashion industry, when 150,000 Messi soccer shirts were put up for sale on the Paris Saint-Germain website on the day his move from Barcelona to France was announced, the shirts sold out out in just seven minutes, according to sportbible.com,” MGO told investors in its prospectus.
But that points to one problem with the Messi Brand: MGO didn’t have the rights to anything sports-related, including jerseys, jerseys and anything featuring Messi’s signature. He had the rights to, among other things, reproduce his tattoos on hoodies, create limited edition “bold” and “arty” graphic t-shirts and recreate “Messi’s favorite casual dress shirt,” a plaid flannel shirt with two breasts. pockets.
While design aesthetics and quality of clothing have never been a concern for MGO Global, sales of Messi branded coats have never generated the level of consumer enthusiasm PSG jerseys have.
The depth of the problem emerged last week, when MGO filed its annual report with the Securities and Exchange Commission. In 2023, Messi Brand’s sales amounted to $1.69 million. That brought the total of Messi Brand MGO apparel sold over the three years it was publicly disclosed to $3.6 million. However, there were signs that the brand was taking off: In the fourth quarter of 2023, Messi Brand sold about $760,000, easily the best quarter ever. Revenue may have been excited by the soccer star making a rare addition of the brand to social media, posting two anniversary sales posts to his 500 million followers in December.
But it was too little, too late. In three years from 2023, MGO had paid Messi just over $2 million in licensing fees, spent about $1.8 million making and selling the clothes and lost $11.4 million across the corporation. With a $1.6 million royalty payment owed to the Inter Miami star in November, another $1.3 million in corporate liabilities and less than $1 million in cash on its books, MGO clearly couldn’t afford to keep its star.
Just as lower division soccer teams sell their best players to top-of-the-table heavyweights to fund their operations, MGO decided to do the same. Last week he sold his star Messi Brand for $2 million in cash with the assumption of an upcoming royalty payment. A spokesperson for MGO did not respond to a request for comment.
The buyer: the much larger Centric Brands, a licensing powerhouse that produces about 150 brands, including women’s Zac Posen jeans, men’s Avirex coats and, at the same time that it must be pushed a little, clothing Tommy Hilfiger for the kids. Centric will have more leverage and deeper pockets to push the Messi brand. It is also likely to be the best to sign Messi to a new licensing deal, as the deal initiated by MGO expires in December. A spokesperson for Centric Brands did not respond to a request for comment.
What’s left for MGO? A little over a year ago he bought the rights to Stand Flagpoles, a line of telescoping poles for homes and vehicles that target right-wing consumers with blog posts like “Top 5 Conservatives to Follow on Twitter” and fields for flags “show your American spirit and your conservative views.”
The flagpole is good business. In the nine months of MGO’s ownership, the brand generated $3.7 million in revenue – more than Messi Brand sold in three years. MGO stock rallied 18 percent in the two days following the news of the Centric sale, which closed March 30 under the terms of the deal.
But that doesn’t mean the separation was easy. MGO shares have fallen 36 percent since the short-term market peak. And on Thursday, the MGO website still featured numerous photos of Messi, looking hopeful and determined in various stylish Hilfiger clothes.
Editor’s Note: This article originally appeared on Sportico, which, like WWD, is also owned by PMC.
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